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14 Nov 2005 : Column 798

Water Charges (South-West)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

10.2 pm

Julia Goldsworthy (Falmouth and Camborne) (LD): I welcome this opportunity to bring the issue of high water bills and water poverty in the south-west to the attention of the House. My hon. Friends and many other colleagues in the House have been assiduous in drawing Ministers' attention to the issue over many years, through debates, questions and meetings, and the Minister has been good in responding. The fact that many Members across the south-west are still plugging away on it bears testament to the fact that it remains a major unresolved issue in my part of the world.

The problem of unaffordable water bills in the south-west is not new. It was originally caused by the privatisation of the water industry, which led to massive increases in south-west water bills. While many of the facts that I will set out are already known, because the issue has been so well debated, it is important that we re-rehearse some of those facts for the record.

We know that the problems were caused by a series of fundamental errors in the privatisation process under the Conservatives in the 1980s. Water companies and private investors initially made big profits on privatisation, because of big discounts. The amount of money set aside for a "green dowry" massively underestimated what the coastline clean-up would cost. The result was huge increases in water bills once that was realised, and the south-west's great expanse of coastline meant that it bore the brunt of clean-up costs, leaving us with the highest water bills in the country. That has been the case since then.

Mr. Dan Rogerson (North Cornwall) (LD): My hon. Friend rightly pointed out that there has been considerable investment in the sewerage infrastructure around the coastline of the south-west peninsula as a result of various clean-up initiatives. Does she agree that that investment has not just led to high water bills now, but is likely to lead to higher water bills for people in the south-west because of the cost of maintaining the infrastructure in future years?

Julia Goldsworthy: My hon. Friend is right—the clean-up will leave a legacy. People will have to maintain the cost of the infrastructure, and because the peninsula is rural and isolated the costs will be higher than they would be otherwise.

Since water privatisation, people living in the area covered by South West Water have consistently paid the highest bills in the country. This year's increases were about 17 or 18 per cent., and by 2009–10 the bills will hit an average of nearly £700 a year. That is not the only problem, however. As well as paying the highest water bills, people in the south-west have some of the lowest incomes and the highest house prices in the country.

Cornwall is the poorest county in the country. Wages are £100 a week lower than the national average and houses are among the most unaffordable. The peninsula also has more pensioners than the national average, and many people subsist on low fixed incomes. For people on low fixed incomes—hard-working families,
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pensioners and other individuals—the cost of water becomes increasingly unaffordable as increases rise, year on year, above inflation. They are the same people who find increases in unfair council tax unaffordable, but at least some people have the option of council tax benefit if they are on the lowest incomes. No such support is available to help these people to meet the cost of their water and sewerage, essential utilities.

Water bills and council tax were the two main issues that I encountered on the doorstep in the run-up to the last general election. While people in my constituency understood that the unfairness of the council tax was a national problem and they were not the only ones suffering, they were outraged that they were being discriminated against and facing a disproportionate burden compared with the rest of the country when it came to their water and sewerage bills.

The figures are depressing. Towards the end of the decade, some of the poorest pensioners in the south-west could be spending 7 per cent. of their disposable incomes on water and sewerage. Indeed, WaterVoice estimates that it could be as much as 10 per cent. The average working household will be spending twice as much of its disposable income on water and sewerage as the national average. The poorest households in the country will be those paying the highest water bills—bills that are set to increase by 25 per cent. by 2010.

Alison Seabeck (Plymouth, Devonport) (Lab): The hon. Lady is right to speak of the disproportionate effects of water bills on low-income pensioners. According to the Department for Work and Pensions, 250,000 children across the south-west are living in households in the bottom quintile of income distribution. If we are to address pensioner and child poverty, we must find a means of mitigating the effects of water charges, particularly in our region. I hope that the hon. Lady welcomes the proposed south-west affordability pilot, which may provide information enabling us to deal with part of the problem.

Julia Goldsworthy: I am coming to that—and I understand that, slowly, the Government are as well.

Given the amount that is being paid, it is not surprising that people are so enraged about the increases. People in London pay an average of £200 a year, about £4 a week. That is relatively insignificant compared with the figure, three times that amount, that my constituents will be asked to pay by the end of the decade. It is the further increases that have aggrieved people so much. Before the increases they were unhappy about their water bills, but prices were stable and they were prepared to swallow hard and pay. Now, with the likelihood of further dramatic price hikes, the issue is bubbling up again.

The Government know of the problems but, as the hon. Member for Plymouth, Devonport (Alison Seabeck) pointed out, they have failed to address the inequalities adequately. While they publicly acknowledge in debates and meetings that water poverty is a problem in the south-west, we have seen no action to tackle the structural problems that have caused the increases. There has been a cross-Government review of water affordability and, following that—as the hon. Lady also mentioned—we have heard the announcement of a water affordability
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pilot in the south-west. It was heralded a year ago, conveniently ahead of the general election, but we were not told a year ago that it would not be up and running until well into 2006. So far, no customer in the south-west has seen the benefit of the pilot or of any reduction in water bills. Sadly, under the present Government they do not look likely to.

The reality is that the pilot will benefit only a small number of people—a fraction of the percentage of the population who are paying the bills—who are already on water meters. They will see benefits in some respects, such as a benefits entitlement check, advice on debt management and repayment planning, water efficiency advice and the installation of water-efficient appliances and devices such as hippos for toilet cisterns, tap inserts and efficient shower heads. As my hon. Friend the Member for North Cornwall (Mr. Rogerson) has already said, the pilot takes no account of the infrastructure costs of providing sewerage to housing. For many people, that is the largest part of their bill. It is not the water they use—no matter how efficient they are, they will still face massive bills on account of sewerage costs.

Mr. Anthony Steen (Totnes) (Con): Does the hon. Lady agree that as the largest part of the water bill is for sewerage charges and as they have been inflated by the EU, which has insisted on increased quality of bathing and ordinary drinking water, the Government should help with those charges, as the water charges are quite reasonable?

Julia Goldsworthy: I certainly agree that the Government should do so, but residents and visitors to the south-west alike appreciate having clean beaches to visit.

Andrew George (St. Ives) (LD): My hon. Friend is aware that all the regulations that the hon. Member for Totnes (Mr. Steen) mentioned were already telegraphed by the time that privatisation was under way. Does she agree that the proposed pilot for 2006 has not even reached its scoping level and will benefit only up to 1,000 out of 600,000 households in the south-west?

Julia Goldsworthy: I agree, and I am as disappointed as my hon. Friend about that. The concern is that it will not help the people—many of whom will be older or on low incomes—who are not currently on a metered water supply. Certain households would not benefit from switching to a meter because they use a high volume of water, perhaps because one of the household members is ill or because it is a large family. The pilot does not even begin to tackle the structural problems that are due to the existing tariff structures and high sewerage costs that generate high bills for some people.

The pilot may help around the edges, but it does not address the fundamental problem that 3 per cent. of our population is having to pay the costs of maintaining 30 per cent. of our coastline, and the costs required to regenerate and maintain water and sewerage infrastructure across a large, peripheral and rural area are higher than in urban areas. That is the fundamental issue that has not been addressed.
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I think that I am right in saying that my colleagues and I are not particular about exactly how this problem is resolved, providing that it is dealt with. Many new suggestions have been made about how to help reduce the bills. One example is the introduction of new tariff structures. In previous debates, the Minister has said:

If he has not shut down that idea, I would welcome any information about the work that his Department has undertaken to review those structures, prices and tariffs and about what conclusions were reached.

Another alternative was suggested by WaterVoice, which drew attention to the Water Charges Equalisation Act 1977. Enacted by the Labour Government, it recognised the problem caused by disparities in water bills across the country. Of course, it was repealed in 1983 by the Conservative Government and several years after that came water privatisation.

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